Welcome to Medicare: A Comprehensive Guide to Health Insurance After 65

Most Americans know that when they reach the golden age of 65 that they are entitled to receive Medicare but they make the mistake of thinking that it is just like any other insurance that they have had throughout their life. This can be a costly misconception. There are many rules and regulations to the program because it is after all, run by the government. You can save time and money by being an informed consumer and knowing your rights regarding Medicare.

How Do You Sign Up For Medicare?

There are rules to being eligible for medicare. You are able to sign up during your initial enrollment period, just before the age of 65 during your “initial enrollment period” and can update your coverage once per year during your annual open enrollment period. Part C has a separate annual enrollment period, which is in the Spring each year rather than the Fall.

Failure to enroll in all or part of Medicare during your initial enrollment period can have additional fees associated with it.

Most citizens will be eligible for Medicare plans if they are either:

— Have reached the age of retirement (65) and have worked enough to accrue 40 work credits during the course of your life.

— Under than the age of 65, but have been disabled and have been receiving SSI benefits for the previous 2 years (24 months).

— Have retired and get benefits or have been deemed disabled by the Railroad Retirement Board for a consecutive 2 years (24 months).

Some people will not qualify for coverage based on a lack of work experience. If this is the case for you, there is an option for you to purchase coverage. You will be responsible for additional monthly premiums beyond normal rates for those that are eligible.

Additionally, it is good to note that there are certain “special enrollment periods” (SEP) which you qualify for in the event of life changing events. Some of these events include but are not limited to:

— Moving out of the area of coverage (Usually a state to state move)
— The end of primary insurance (usually through an employer)
— You become eligible for Medicaid and Medicare
— You are released from jail

The Branches of Medicare:

Medicare Part A:

Medicare A is your basic plan. Everyone that pays money into taxes before the age of 65 and work enough to attain at least 40 work credits are able to get this portion of Medicare essentially for free because the money they put into it for the years prior covers the monthly premium once they qualify.

Covers:

— Inpatient and outpatient hospital services
— Limited time periods of skilled nursing (in or out patient)
— Most home health care (See your plan for exclusion and details)
— Hospice stays

Medicare Part B:

Medicare B is offered as additional coverage and is considered separate from Part A. Where A covers hospitals and skilled nursing care, Part B covers things like routine exams, preventative care, and professional services. This part will often cover the doctor’s bill for a hospital stay but not the facility itself.

Everyone qualifies for Part B, if they qualify for A. However, there is a monthly premium required for Part B and how much that is will depend on how much money you make. Additionally, some people will automatically get enrolled in Part B where others will have to request it. The easiest way to ensure that you have coverage is to request to sign up at the same time that you request the rest of your Medicare coverage.

Medicare Part C (commonly referred to as Medicare Advantage)

This is the kind of plan that acts the most like standard insurances that one would commonly have before the age of 65. The reason that it is similar is because it is often a service offered by private insurance companies that have contracts with The Center for Medicare and Medicaid Services (CMS) to cover Part A and B services. Rather than opting for traditional Medicare, if you want to have it all in an all-inclusive insurance package then this is what you choose. This is also why it is called Medicare Advantage.

Like traditional private insurance, these plans allow you to choose between insurance options such as:

— PPO vs HMO
— Fee-for-service
— Medical Savings Accounts (MSA)

Additionally, you can choose to have other services or needs covered. Each plan is different and while some may include the following options, others will simply have them available or know where to refer you for the them.

Typical included or add-on services include:
— Prescription coverage (This negates the need for a Plan D selection)
— Vision care and eye glasses (Not covered by Medicare)
— Dental (Not covered by Medicare)
— Extended or long term care
— Hearing aids

What is Medigap?

During the mid 2000s, the term “Falling into the Gap” was a commonly used term. This gap that everyone was talking about referred to the medigap coverage that was not included in Medicare. Rather, those that are eligible for Medicare can choose to select a private insurance policy that covers the costs that are not originally included in traditional medicare coverage.
Some of these costs include:

— Co-payments
— Deductibles
— Medical care outside of the United States
— Non-covered procedures
— Pharmaceuticals
— Eye glasses
— Dental

For these plans, an individual will select the coverage that they want and choose another plan or plans to cover the costs. Unlike Medicare Advantage, these plans are designed to cover a portion of what Medicare does not. If a person wants additional coverage for hospital or inpatient, or perhaps they know they go to the doctor’s office a lot more but rarely to the emergency room or hospital. In this case, they may want additional coverage and so they would choose something that helps with their copays for visits or simply allow them to see a specific provider for a lower cost.

Often hospital and doctor offices are covered under separate plans, as are drugs, eye care and dental. A person can choose each of these coverages ala carte through private insurance companies. Some companies provide all inclusive medigap packages that fill in the gaps of Medicare (rather than replacing it, which is more like Medicare Advantage).

Keep in mind, that these policies will usually only cover one person. Each person that wants coverage with a Medicare medigap policy in a household would need to purchase a plan to ensure individual coverage.

Medicare and the Health Insurance Marketplace

You may have concerns about these topics because there are many misconceptions going around, especially as the Affordable Care Act goes through its many growth spurts. Many people get confused over how the Health Insurance Marketplace is going to affect their benefits. Simply put. It doesn’t. We’ll say it again. The Health Insurance Marketplace has nothing to do with your benefits. Rather, it is only for those that aren’t eligible for health care coverage through Medicare.

Tip: Did you know that it is illegal for someone to even attempt to sell you insurance if you have Medicare and they are aware of this?

If you currently have a plan through the marketplace but are newly eligible for Medicare, you will need to relinquish that plan when you become eligible and active for Medicare. You are not allowed to have both plans at one time.

Making Cents of Medicare: Understanding Fees, Expenses and More

The first step to understanding Medicare is knowing exactly what it is that you are dealing with. Without going through the entire history, it is safe to say that the program is designed to help those that are disabled or over the age of 65 get the health care that they need to survive. Medicare is broken into segments which are referred to as “parts” that are:

— Part A
— Part B
— Part C (Medicare Advantage)
— Part D
— Medigap Policies (Additional to Medicare, but worth mentioning)

Each part has a specific area of services that they cover. Standard Medicare A does not cover more than what is required to support life and B helps with things that assist with routine ailments. Part C is a massive amalgamation of the whole of Medicare, put into a tidy package. If you want something similar to a health insurance plan that your work provided, C is what you want. It’ll cost you though! Part D covers prescription drugs and is easy to remember. Just think D for Drugs. That’s Part D.

Do you have to pay for Medicare?

The short answer to this is, yes. Nothing is for free! Each part of Medicare has it’s own financial requirements. For some parts it is covered and there is no cost to you if you have previously put money into the system, which you do by working and paying taxes before the age of 65. For others, if you didn’t make enough or didn’t work in an industry that medicare credits apply to then you can get coverage but you will pay more. There are also parts of Medicare that you have to pay for but are considered optional.

Optional Fees

Other plans are considered optional by Medicare. They are not covered under the original Medicare plan but are available for those that are eligible. For example, Part D, the prescription drug coverage, you can purchase a separate policy that will only cover prescriptions. You will be responsible for the monthly premium and have to pay that in addition to your coverage for Part B and Part A.
Then, there is Medicare Advantage, also known as Part C. Typically, this kind of plan will replace your current Medicare A and B policies and you will have a streamlined service above and beyond the general baseline of coverage. For this kind of plan, you will have a monthly premium that is agreed upon between you and a private carrier.

Additional Fees

If you qualify for Medicare, you will get coverage. However, there will be fees associated with services. For most plans there is some kind of deductible or co-pay that you are responsible for before Medicare will cover your claim. This is often the reason that people consider a Medigap policy.

To get a clearer look, let’s break it down part by part so that you can get a more digestible portion of what costs are really associated with your Medicare coverage and options. Here is a breakdown of general financial responsibilities for you for each part.

Medicare Supplement Plan: Part A

There is no monthly premium for you if:

1. You worked enough to earn 40 tax credits before the age of 65. If you are unsure of how many credits you have, contact The Center for Medicare and Medicaid Services (CMS) directly.

2. You receive retirement benefits through either Social Security (SSI) or the Railroad Retirement Board.

3. If under the age of 65 and have been deemed disabled by either SSI or the Railroad Retirement board AND have also been receiving benefits for said disability for the subsequent 2 years (24 months).

4. You have end-stage renal disease (kidney failure) and need dialysis or a transplant.

What if I don’t qualify for fee-free Medicare?

You can purchase a Medicare Part A plan but will be charged a monthly premium for coverage if you do not qualify for coverage based upon the above criteria. However, the premium for Part A is separate from other parts of Medicare.

Medicare Supplement Plan: Part B

There is a premium standard amount that is set for Part B each year. Slightly adjusted to inflation, the standard amount usually rests around 120.00 per year.

Some aspects that can affect how much your yearly premium include:

— If you enroll for Part B later than you did for Part A (as in you don’t choose it the first year but then you do the next).

— You are not receiving SSI benefits

— You opt for direct billing (can reduce cost)

— When you have Medicaid as well (Medicaid will pay your premiums for you but you get both coverages)

— You’re income that was reported 2 years prior was higher than average.

Why Income Affects Your Premium

Those that are extremely low income can receive help to get this fee waived. For people that make above the limit for Part B (based off of taxes reported 2 years prior) will have to pay slightly more per year based off of Medicare’ Income Related Monthly Adjustment Amount (IRMAA). This amount usually is charged to those making an excessive amount of money as compared to the general population and is used to keep the plan affordable for everyone. The increase is minimal, but worth noting.

Medicare Supplement Plan: Part C

Because Part C is optional and so inclusive, there are premiums that are associated. These rates are agreed upon when you purchase a plan from a private insurance carrier. There are a number of factors that can affect your premiums for Part C including:

— The company you choose your plan through
— Additional options included in your plan
— Copay and deductible amounts

Medicare Supplement Plan: Part D

Like Part C, Part D is based upon what you choose to purchase from a private insurance company. Rates will vary greatly depending on the formulary (the guidelines that dictate what drugs are covered) and how comprehensive the plan is.

*Note: Saving money on a cheaper plan only makes sense if your drugs are covered. ALWAYS check the plan’s formulary before making a decision to purchase. Additionally, ask about the exception processes for drugs that are not covered. Non-covered medications can increase your expenses astronomically

How to Make the Most of Medicare Supplemental Insurance

Knowledge is Power! The best way to make the most of your coverage is to know what you are getting for your money, clarify at the end of the year how much you will be paying for the next year and make sure that the services you use are covered.

Here’s a few tips to make it easier for you:

1. Make sure that you are informed about your coverages – Medicare plans change year to year. Check your plan every year and know what services are covered and those that are not. If you know that you routinely need a certain kind of care and your plan doesn’t cover it, don’t be shy about shopping around. Medicare provides a shopping tool on their websites and many private companies will have sign up forms on their websites that include detailed information about plans for the upcoming years. Note: This may mean that you will have to check with each company that you purchase services through, if they are different.

2. Know your enrollment periods – Each year at the end of the year you will notice an increase for commercials with companies like WellPoint, Humana and more all trying to sell you insurance. Chances are, when you see these ads, you know it is time to call your plan and square yourself away for the next year. Or you can follow the Medicare guidelines and circle November 1st on your calendar. While the day that open enrollment begins can change each year, November is when you want to get it taken care of.

3. Sign up during your initial enrollment period – Just before you turn 65, most people need to let Medicare know directly that they will have coverage, and choose whether or not they want Part D or what or other options. While some plans are optional, simply forgetting to sign up for them can be costly. For example, as part of signing up for Part D your monthly premiums are set for life. If you choose no coverage, then you have no premiums. However, say you had previous coverage through a job and that ends or you change your mind and do need prescription coverage later, you will be able to but the premium rates are going to reflect from the age of 65 and therefore will be higher since you hadn’t paid premiums on it before.

As a rule of thumb, if you think you may use Part D at some point later in life, it makes more sense to just pay for it from the time that you are 65 if you can.

Medicare Plan A Vs B Review

When you hear the term Medicare what comes to mind? Most people have thoughts that center around the original plans of Medicare, which are Part A and Part B. Together, these two initial parts combined would give those over 65 and those that are disabled, the basic care they would need if they were sick. If you were thinking about these services, then you are on the right track to understanding Medicare. However, if you still have a few questions, here is some information that can help you tell the parts apart.

Medicare A and B Coverage (Side by side comparison)

Here are some of the more common services that both Medicare Part A and B cover. As you may notice, Medicare A is more focused on hospitalization. Part B is focused on care provided that is medically necessary once out of the hospital either for post-care or for routine health. It is good to note that while Medicare A usually covers services in the hospital including in-patient and partial inpatient, that for mental health all aspects fall under the care of Medicare Part B.

Medicare A – “Hospital Insurance”

— Inpatient care including rehabilitation and critical abscess health
— Skilled nursing facilities (non-custodial)
— Hospice care
— Home health care
— Durable medical equipment (Oxygen machines, walkers, wheelchairs etc.)

Medicare B – “Doctor’s Insurance”

— Primary care visits
— Mental health coverage (all aspects – inpatient/outpatient)
— Short supply of prescriptions when discharged from hospital
— Ambulances
— Clinical research and testing services

How To Know For Sure What is Covered

Standard Medicare coverage does have slight changes made to it each year. You should receive an Evidence of Coverage (EOC) and also your Annual Notice of Change (ANOC) which will cover the services and benefits of each of your plans. You will receive one for Part A and one for Part B. Read these over to have a fuller understanding of your coverage for the upcoming year.

Enrolling for Medicare Part A and B

Enrolling is easy for both Medicare A and B and the regulations for them are both the same. Both plans are overseen by CMS (Center for Medicare and Medicaid Services). You are eligible for both up to 7 months before you turn 65 or 2 years after you have become disabled and have been receiving benefits. During this initial enrollment period you can call directly and choose a P{art A and Part B plan, make a choice of coverage and decide whether or not you want additional parts as well. Once your initial enrollment period is over then you will have to wait for your annual enrollment period, which is in the fall of every year, to make any changes on your plan.

At a Glance Enrollment Options:

7 months before you turn 65 or 2 years after you have qualified for disability and have been receiving benefits:

Initial enrollment period. This is the time to make sure that you sign up for coverage

Fall of each year:

This is your annual enrollment period. This is when you can make changes to your plan, choose another plan entirely or add coverage that you didn’t sign up for before.

Special enrollment periods for Medicare Advantage:

These enrollment periods are where you can make changes to your plan, but you can only do so by meeting specific criteria. These exceptions to make changes are usually caused by a change in coverage due to your employer, such as losing a job and losing coverage while eligible for Medicare. When this happens you have a limited time that you can sign up and make a Medicare plan selection. Other qualifications for a SEP include being released from jail or moving to another state.

Understanding Your Options

Medicare Parts A and B, together, help to create a more cohesive coverage for people that need it. However, keep in mind that Medicare doesn’t cover everything. If you want additional services (such as prescription drugs) then you will have to look beyond these two standard parts. Additionally, both Medicare A and B provide basic care and services. They are designed to address the issues of health coverage for individuals in their later years or who are disabled. Services will be required to be approved by CMS and the rule of thumb is that Medicare covers medical necessity, not quality of life.

Medicare Advantage / Medicare C: The All Inclusive Medical Insurance Option for the Disabled and Elderly

Instead of choosing Medicare Part A and B, you can instead opt to purchase a plan through a private insurance company that gives you both services in one package. Many Medicare Part C Plans (also known as Medicare Advantage) also include additional coverages that are not included in traditional Medicare such as prescription drugs or dental care.

What does it cover?

Medicare Advantage Plan coverage consists of a wide array of options included services including:

— Primary doctor visits
— Routine and preventative care
— Mental health
— Hospital and ambulances
— Prescription drug coverage (optional)
— Dental and vision (optional)

If you are familiar with the original Medicare standards you will note that this plan type covers areas that are also covered by each part of Medicare. Rather than having your insurance broken into parts, with Medicare advantage you are able to have the services that you want covered within one structured plan.

Medicare Part C can offer more than what is typically covered by Medicare Part A and B, however the private companies that provide service must cover the same thing as Parts A and B as a minimum for coverage option. Whereas Medicare has a standard of coverage that is based upon what they consider to be medically necessary, the private insurance company will also have the same regulations. Again, their considerations must still include what Medicare would offer the applicant. Additionally, it should be noted that many items that Medicare does not cover as exclusionary will also be the same for private insurance options.

The Application Process

Medicare C / Medicare Advantage is not offered through The Center for Medicare and Medicaid Services (CMS). These plans are not offered through the government directly, rather you need to purchase your plan from either insurance companies such as Anthem/WellPoint, Humana and Cigna. Each state will have their own offerings for the plan and it is worthwhile to check out the changes each year. Medicare and AARP both post rating systems that give information about the new plans around the open enrollment period.

Paying For Your Medicare Advantage Plan:

That amount that you pay for your coverage will be deemed your “out-of-pocket costs”. There are a variety of factors that can affect the coverage cost for your Medicare Advantage Plan including:

— The health services that you need / receive
— Deductibles
— Co-insurance
— Co-pay
— Monthly premiums (including whether or not the coverage includes your Part B premiums as well)
— In and out of network costs
— Out of pocket limits (Some plans pay for everything 100% after a certain limit is reached

Yearly Open Enrollment Period

It is important to note that coverage for private insurance changes each year. Based on trends, new drugs or services offered in the medical industry and new Medicare laws, the private insurance companies will adjust the coverage plans that they offer accordingly. They are only allowed to change once per year, and each year you will have access to select a new plan at the beginning of the year.

Enrollment periods for Medicare Advantage:

Initial enrollment period: For Medicare C / Medicare Advantage, the initial enrollment period is the same as it is for original MEdicare. You will choose to sign up for your plan after you have been disabled and have also received your benefits for 2 years (24 months) or if you are turning 65. You have up to the previous 7 months before you turn 65 to get your benefits squared away and to make your selection.

Annual Enrollment Period: Unlike original Medicare, the annual enrollment period for Medicare Advantage is in the Spring of each year.

Special Enrollment Period (SEP): There are a number of reasons that you can qualify for a special enrollment period. However, with Medicare Advantage, SEPs are usually more difficult to come by. This is because state moves don’t always affect these kinds of plans. You can qualify for a SEP if you want to sign up for new coverage and lose your primary coverage, are released from prison or if Medicare cancels the contract with your private insurance carrier that you have purchased through.

ANOC and EOC

Each year coverage for your plan will change and you will be notified of these changes through two documents referred to as your Annual Notice of Change (ANOC) which tells you of upcoming changes to your plan specifically, and the Evidence of Coverage (EOC) which gives you the details of your plan that you have. This is true for all Medicare plans and those changes are made by the oversight of CMS.

These documents will come from your insurance company directly rather than CMS because with Medicare Advantage, you are covered by a private insurance company. It is important to be mindful each year of your coverage and consider your plan yearly to ensure that it is continuing to cover your medical needs.

Common coverage changes that made are:

Yearly premiums

Yearly premiums are how much you pay the plan for your coverage through the year.

Co-Pay / Co-Insurance

The amount that you pay to your doctor, or your portion that you pay to cover your services, as Medicare doesn’t cover them at 100%.

Deductible

This is the amount that you have to pay before any services are covered.

Services Covered

The actual services that are covered under Medicare Part C are different than those of Parts A or B. Most private insurances will cover the same thing as original Medicare and then additional services.

Drugs Covered

While these changes are influenced by Medicare, the actual decisions are made by the company that you purchase your Medicare Advantage plan through. They are the ones that make the decision about what services they will cover. Each year, plans establish the amounts they charge for premiums, deductibles, and services. The plan (rather than Medicare) decides how much you pay for the covered services you get.

Introduction to Medicare Part D

Prescription Coverage and Medicare is a tricky thing. Originally, there was no prescription coverage other than what you got from your doctor if you were discharged from the hospital. Those drugs are covered by Medicare Part B. However, as the need for prescriptions increased and people demanded more options, later Medicare Part D was added to the system with the Medicare Modernization Act (MMA). With it you are able to get additional prescription drug coverage that you would use for routine health maintenance and getting better.

Signing up for Medicare Part D

You have to enroll for Medicare Part D through a private insurance company or through CMS (Center for Medicare and Medicaid Services) directly. Unless
you have other prescription coverage (through Part C or through an employer) you will need to purchase a Medicare Part D plan if you want to have prescription coverage with your benefits. While the plan is optional, if you decide to not sign up and you change your mind later, when you enroll you will be forced to pay a late fee subtax and your fees will be higher than other people that signed up when they first became eligible.

Medicare Part D enrollment periods are the same as they are for Parts A and B. You can add it with your initial enrollment and then you are subject to annual enrollment periods. During these times you are able to make changes to your plan or choose a different carrier entirely.

Initial Enrollment Period: 7 months before you turn 65 or 2 years after you have qualified for disability and have been receiving benefits.

Annual Enrollment Period: Yearly period where you can make changes to your plan, for Medicare Part D this is in the fall.

Special Enrollment Period (SEP): Qualifying events that allow you to change coverage including moving, your plan being cancelled by Medicare and more. These qualification periods are situationally based and not a reliable way to change your coverage.

Note: It is important to note that if you choose a Medicare Part C / Medicare Advantage plan and then you choose a Medicare Part D plan for drug coverage, you will be disenrolled and automatically signed up for Medicare A and B. If you have a Medicare Advantage plan, check your benefits with them directly before making changes to a prescription plan because you are not allowed to have dual coverage (such as prescription coverage through both Parts C and D). For this reason it is a good rule of thumb to consider that if you have A and B, you will want to consider D. If you have Medicare C, then you are often better off finding a plan that has prescription coverage with it or maintaining your prescription coverage through the same private insurance company that you have purchased your benefits through.

Understanding your Medicare Part D Coverage

Prescription coverage through Part D is regulated by CMS. This means that even though you will purchase your plan through a private insurance carrier, that the regulations of coverage set forth are still based on what the government will and will not allow.

What is a Formulary?

Your plan will provide you with a formulary that lists the drugs that are covered. This is usually available either on the company website or by a document that you will receive in the mail.

The formulary is set up so that you can understand what prescriptions will be covered and at how much. Most private insurance companies have what are called “drug tiers”. The base tier will provide the lowest cost to you drugs, and generally you will have no or a very low copay to them. These are commonly your generic drugs. Tier 2 drugs are more expensive and generally are name brand drugs. If they have a third tier it can cover traditionally non-covered (not excluded) drugs, newer drugs that are still quite expensive or drugs that are for more complicated or rare conditions. Anything that is excluded by Medicare is generally not covered unless you choose a more expensive plan.

Changes to the Formulary

Typically, changes will be yearly and you will be notified by the Annual Notice Document of Change (ANOC) that prescribes detailed changes to the plan for the upcoming year. If you don’t like the changes then you can change to another plan in the annual enrollment period which is in the fall. If changes are made mid-year, you will be notified of the changes before they happen. In most cases this will reflect changes in MEdicare approval (such as if a drug is redacted by the FDA approval list or if the formulary of the drug itself changes or goes to a generic).

It isn’t fair that you sign up for a plan and then coverage changes mid-year and for this reason there are rules to what the private insurance companies can and can’t do. For example, changes can be made to the formulary in the middle of the year but they cannot be made for the first 60 days after you have signed up to your plan or after the annual enrollment period.

Coverage Gap (AKA Donut Hole)

On many Part D plans, there is a period where you will reach that drugs are no longer covered. Your benefits change based on the amount that you use them and if you reach a certain limit, your prescription prices can get much more expensive. This was designed to keep costs low for the many that are using the program and to maintain the program itself. However, if you run into many medical expenses, have to take expensive prescriptions for a condition or require more medications than anticipated (to a catastrophic level), you can be caught unaware.

This area is known as the coverage gap or the donut hole.

It is important to review the details of your plan to see how they handle this. Often you can pay more to include gap coverage on your plan.